2023 may be the year offices will return to near-2019 occupancy levels. For real this time. For workers, that means the end of the return-to-work war remains out of reach.
So indicates the latest report from real estate consulting firm JLL. To date, it found, bosses have enacted new attendance policies this year for 1.5 million office workers. Another million are expected to face more requirements in the second half of 2023.
It’s the latest in the three-year stretch of the return to office debate. 2022 was defined by a will-they-won’t-they power struggle (many employees walked out, filed petitions, and rage quit) that seemed to give way to a stalemate in 2023 as hybrid arrangements became a sort of truce between the pro-remote crowd and their onsite bosses. But JLL’s data signals that the office return wars continue ahead with little hope of near-term resolution.
Workers haven’t gone down without a fight.
U.S. Office occupancy has hovered around 40% to 60% of pre-pandemic norms despite the slew of last year’s mandates, JLL found. Indeed, the latest data provided to Coins2Day from Kastle, a security company tracking key card swipes nationwide, shows that offices in the top 10 U.S. Metro areas were 49.1% full in the week ending July 12. Aside from one week at 50.3% in early June, offices (as tracked by Kastle) have never been half-full.
Clearly though, bosses are still trying, and real estate firms like JLL can see the domino effect; shortly after Meta, Alphabet, and Lyft unveiled their return mandates, the 10 largest technology tenants in the U.S. All announced some form of concrete hybrid attendance policy, JLL shared with Coins2Day.
But JLL’s report says re-entry rates are likely to set a post-pandemic record in Q4 of this year—perhaps more than 80% for midweek days. It’s good news for the in-person work proponents, per the report, which are mainly bosses. Paying for office space in an empty downtown building is eye-wateringly expensive, and bosses are bolstered by the idea that working from home is less productive, innovative, and connected.
“Pre-pandemic occupancy levels will arrive about a year from now,,” John Gates, CEO of JLL’s Americas Markets, told Yahoo Finance. For some firms, particularly those helmed by staunchly pro-office leaders like Jamie Dimon or Elon Musk, if it happens, it may be much sooner. If JLL’s 2023 numbers align, 2.5 million workers will occupy at least a hundred million square feet, at least a couple of days a week, he told Yahoo.
Recovery won’t just be an achievement for company morale; it will be crucial for companies’ real estate portfolios. In a 2022 paper, New York University and Columbia University researchers predicted a 44% drop in New York City office values by 2029. This “real estate apocalypse,” brought on by the remote work revolution would result in a nationwide $500 billion “value destruction.”
But bosses shouldn’t get ahead of themselves. That 80% occupancy figure might be overambitious if you ask Mark Ein, Kastle Systems chairman. He told Coins2Day’s Trey Williams in December 2022 that buildings will unlikely ever crest 60% capacity. “It goes in fits and starts,” Ein said. “[Office occupancy] has been on a steady rise since the beginning of [2022]. But there will be a natural ceiling to it. We’re never really going to get to 100%.”
For the past couple of years, there has been a push to return to office after Labor Day that never seems to pan out to full fruition. Plus, we’ve likely already reached max capacity, some experts say. “I don’t expect everyone to be in [the office] most of the time, and the banner moment to return has probably already passed,” Jose Maria Barrero, one of the economics professors behind WFH Research, told Coins2Day in February. “I would’ve thought last fall or last spring, some time like that.”
And so, after three-and-a-half years of insistence that it’s nearly over, the RTO war wages on.
